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Once upon a time in the American healthcare system, big data was an unknown idea. Recognizing that healthcare costs rose unmanageably and healthcare quality varied dramatically without clear explanation, Congress introduced Managed Care with the hope that relying upon a for-profit business model would make the system more competitive, more comprehensive, and more effective. Now, over thirty years later, it appears that new changes in American healthcare will position “big data” as the driver of effectiveness and competitiveness. Here are a few reasons why.

When thinking about the government policy that will make big data essential in the new healthcare system, three main pieces of legislation come to mind – the obvious heavyweight of the group being the Affordable Care Act (ACA). By now, most know that by passing the ACA into law, the federal government shifts America away from a volume-based system of care (in which doctors and hospitals make money based on how many tests they run and treatments they try) to a value-based system in which doctors and hospitals receive rewards according to the value created for patients. However few know that in order to actualize this value-based system, the ACA directly implicates big data at federal and state levels of healthcare. For example, the ACA authorizes the Department of Health and Human Services (HHS) to release decades of stored data and make it usable, searchable, and ultimately analyzable by the health sector as a whole to promote transparency in markets for healthcare and health insurance. Here, the driver of transparency, and thus competitiveness and effectiveness, is clearly big data.

In other examples, the ACA uses language that endorses, if not mandates, big data use throughout the system. The ACA not only explicitly authorizes the Center for Disease Control (CDC) to “provide grants to states and large local health departments” to conduct “evidence-based” interventions, it creates a technical assistance programs to diffuse “evidence-based therapies” throughout the healthcare environment. Note that in the medical community, “evidence-based medicine” means making treatment decisions for individual patients based on data of the best scientific evidence available, rendering the use of this relatively new term an endorsement of big data in healthcare treatment. These pieces of evidence – in the form of direct references to big data at the federal level, state level, and patient level – strongly support the conclusion that the ACA creates a new system reliant upon big data for efficiency and competitiveness.

The remaining pieces of legislation further signal big data as the new lifeblood of the American healthcare environment. In 2009, the Open Government Directive, in combination with the Health Data Initiative implemented by HHS, called for agencies like the Food and Drug Administration (FDA), Center for Medicare & Medicaid Services (CMS), and CDC to liberate decades of data. The Health Information Technology for Economic and Clinical Health Act (HITECH), part of the 2009 American Recovery and Reinvestment Act, authorized over $39 billion in incentive payments for providers to use electronic medical records, with the goal of driving adoption up to 85% by 2019. Finally, to facilitate the exchange of information and accelerate the adoption of data reliance in the new health environment, CMS created the Office of Information Products and Data Analytics to oversee numerous databases and collaborate with the private sector. Among other functions, this office will oversee the over $550 million spent by HHS to create data clearinghouses – run by states – that will consolidate data from providers within the given state. All of this legislation, which essentially produces a giant slot for a big data peg to fill, paves the way for a new healthcare environment reliant upon rapid sharing, analysis, and synthesis of large quantities of community and national health data.

Now at this point, nearly four years after legislation supposedly opened the floodgates of big healthcare data to the private sector, the reader must wonder why more private sector companies haven’t taken advantage of an obvious market opportunity. The answer is: actually, a few first movers have.

Blue Cross / Blue Shield of California, working together with a company called Nant Health, has created an integrated technology system that allows hospitals, HMOs, and doctors to deliver evidence-based care to patients under their jurisdiction. This system catalyzes performance improvement, and thus revenue-generating value creation, across the system. The use of big data has also allowed some first movers to innovate and generate applications reliant upon newly liberated data. A company called Asthmapolis created a GPS-enabled tracker that monitors inhaler usage by asthmatics, directs the data into a central database used to detect macro-level trends, and merges the data with CDC data pertaining to known asthma triggers. These few cases illustrate that private sector engagement in this new market opportunity remains new, and diverse, and far from delimited.

The ACA has moved into its execution phase, and the introduction of the big data idea poses new and interesting challenges to how the American Healthcare system will evolve. Some challenges will bring about positive change, such as identification or clear opportunities for preventive care. Other challenges will bring negative change, such as the adverse effects transparency will likely have on certain patient groups. Regardless, it looks like big data is here to stay.